Strong Earnings Don’t Impress; Dow Off 22
Stocks fell as strong profit reports from banks and brokerages failed to impress investors who have driven the market to record highs in recent weeks.
The dollar, meanwhile, sank against major currencies.
The Dow Jones industrial average dropped 22.16 points to 11,187.68. Broader stock indicators were also lower. The Standard & Poor’s 500-stock index fell 11.13 points to 1,407.65, and the Nasdaq composite slipped 34.19 points to 2,830.29.
With all three indexes within close range of the records set Friday, however, analysts said, the drops were merely the result of minor selling by investors hoping to lock in profits.
The yen staged its biggest rally against the dollar in 5 1/2 months amid a growing appetite for Japanese securities and the currency to buy them. The dollar sank to 117.80 yen, from 120.98 on Friday.
Foreign investors have snapped up Japanese stocks in recent months, helping push the benchmark Nikkei 225-stock index up 33% since Jan. 1. On Monday, it jumped 1.6%. The Euro rebounded against the dollar, rising to $1.029 from $1.020 on Friday. The euro, which had fallen as low as $1.0124 earlier, bounced higher when it climbed back to $1.020, setting off automatic buy orders, traders said. That rise helped lift the British pound and Swiss franc more than 1% against the dollar.
On U.S. stock markets, Dow component Citigroup issued a strong quarterly earnings report, but after an initial rise, its stock fell prey to the broader market’s doldrums, closing 19 cents higher at $49.19. Banker J.P. Morgan, which participated in the strong-earnings trend, rose 63 cents to $138.
Charles White, portfolio manager at Avatar Associates, said investors were expecting the banks’ results to top the estimates of Wall Street analysts, and were reluctant to bid the shares much higher.
Decliners outnumbered advancers by a 13-9 ratio on the New York Stock Exchange, where trading volume was light. Bond yields rose slightly.
Among the highlights:
* Airline stocks were mostly higher as Continental and Delta posted brisk earnings. Continental rose $2.88 to $41.44, Delta surged $3.13 to $62.19 and Alaska Air Group gained $1.38 to $43.25.
* Shares of start-up makers of network equipment fell on concern that their rocketing stock prices aren’t justified by their dim near-term profit outlook. Efficient Networks tumbled $6.75 to $51.88, Paradyne Networks skidded $7.38 to $48.88, Redback Networks drooped $7 to $163 and Juniper Networks lost $7.88 to $135.
* E-Trade Group sank $2.81 to $34.69 despite reporting a narrower-than-expected loss of 10 cents a share, as the online brokerage said trading growth slowed. Charles Schwab dropped $2.94 to $49.50, Ameritrade Holding lost $2.50 to $31.75 and National Discount Brokers Group slumped $4.19 to $44.25.
Market Roundup, C12
